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Health Care Current – April 22, 2014

My Take: On the Road to Value-based Care, are the Physician Reimbursement Data a Gold Mine?

The Centers for Medicare & Medicaid Services (CMS) has released data on Medicare reimbursements to physicians for the first time in decades – representing $77 billion in reimbursement, 880,000 providers and including 9.2 million lines of data. The health services researcher in me is thinking about what we could do with the data. I understand that we need to be careful not to jump to conclusions about the outliers. For example, some early analysis of high utilizers have shown that what looks like a doctor with an extraordinary patient load is actually many doctors using the same identification number for billing. But still, these data have the potential to be a gold mine of information and could lead to new insights about practice patterns and create new opportunities for better value.

One of the first analyses of the data showed a dramatic variation in reimbursement for certain drugs across the country. To me, this finding reinforced what John Wennberg has been showing since 1967 when he received $350,000 from President Lyndon B. Johnson to analyze Medicare data for hospital and physician performance: There are differences in practice patterns across the country, leading to real differences in spending without apparent differences in outcomes.

I am sure that physicians believe they are providing high-quality care to their patients. But to me, the variation in reimbursement points out that health care could benefit from an independent and rigorous analysis of which drugs work best and for which patients, and which treatments offer the best value (both in cost and efficacy). This was the promise with a comparative effectiveness agenda and the creation of the Patient-Centered Outcomes Research Institute (PCORI) in the Affordable Care Act (ACA).

In addition to PCORI and the ACA, one of the promises of big data and analytics is that they should be able to provide us with information about cost and outcomes of different treatment choices using evidence drawn from patient care. Wouldn’t it be great to get to good scientific findings without having to wait for the results from clinical trials? Clinical trials have important roles in establishing the safety and efficacy of therapies, but have tended to be limited to particular patients carefully selected for the trial. Also, they can take a long time to generate results.

But just knowing whether a particular treatment is more effective may not go far enough to change medical practice. It is helpful but might not be sufficient. Now the challenge lies in how to disseminate this information to doctors who are busy with patient care every day and get them to act on it.

As we move to value-based care and change the incentives in the payment system to reward value over volume, we could see health care providers and clinicians begin to look for information on comparative effectiveness and then actually use it. All other things equal, a physician who has incentives to get better outcomes – lower total cost of care and patients who get better – could be more likely to act on robust information about which treatments are most effective and offer most value.

Health information technology has the potential to support clinical decision-making by connecting information on patient characteristics, comorbidities and risk factors with scientifically valid information about what therapies lead to better outcomes and presenting this information at the point of care.

Going back to the variations in Medicare payments, the health care industry should remember that there is a consumer angle too. Of course, many patients do what their doctor recommends, and most patients in Medicare have supplemental coverage that helps to shield them from the 20% of the bill that they are responsible for. But these costs show up in Medigap and Medicare Advantage premiums; all other things equal, beneficiaries could pay more in places with higher spending. Spending on services that do not necessarily result in better outcomes seems to me to be the definition of “waste.”

I am a great supporter of tools that help patients with a given condition understand the tradeoffs between different therapies, including not getting treatment. Some research has found that patients tend to choose more conservative approaches when they have more complete information about the tradeoffs. While we still have not figured out how to get these tools into patient care at the right time, providers and physicians working under value-based incentives may have a greater motivation to work these types of tools into patient care.

As discussed in last week’s Health Care Current, I agree that we have to be careful in using the data that CMS has released and not jump to conclusions about what it means for individual physicians.1 But I hope that the data will be a step toward getting researchers to develop and providers to use more evidence to achieve value-based care.

FX

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